VAT News

Tour Operators Margin Scheme – Negative Margins


What happens to the VAT calculation required under the Tour Operators Margin Scheme (TOMS); which is used to work out the VAT due on such activities and bases it around the profit made on the supplies; when the suppliers costs are more than its income from that supply?

The case was considered in the First Tier Tribunal (FTT) relating to the taxpayer The, as they were hoping to argue that a repayment of VAT would arise as a result. The FTT did not agree, however. The judgment accepts that the TOMS calculation – done on an annual basis - does bring in supplies where a negative margin can be included for specific services offered but didn’t see that together this would create the right to a repayment of VAT overall, arguing that there cannot be an overall negative margin produced from that calculation. The best case is that the output tax due on these unprofitable activities would be nil.

If you need help and support with TOMS calculations, then do get in touch with Andrea Brindley and Lee Price in our team or use


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